Thursday, January 16, 2014

Hardy Har Har!


No Good Deed Goes Unpunished
Or, I Easily Can Laugh at Myself !J


The other day I was researching a Fannie Mae issue and came across an investors’ website thick with Fannie Mae commentary. 

I noticed several posts by somebody self-identifying as “TimothyHoward” and many accolades for that “TimothyHoward.” 

Knowing that my friend doesn’t communicate in that manner, but needing to make sure, I contacted Tim and asked if he was “broadsiding” on the Internet. He confirmed that he wasn’t on any website commenting on GSE or Fannie issues and I was free to say that. 

So, I went on the board, identified myself as a “blogger, friend of the real Tim, etc. etc.” and assured posters “the” Tim Howard, former Fannie CFO and author of the “The Mortgage Wars,” was not on the board and that someone was pretending to be him. 

Shortly, I received the following from a board poster: 

kbkhkmartz | Report Abuse  

Hi Bill
I'm new here and you (sic) a big shot blogger but I read your blog and I suggest you change name to Bill Malarkey.

Thanks for your time.


Mr. or Ms. Martz, you are welcome and I suspect you are part of a not very exclusive club! But, your funny post made my day and I shared it with several others. 


Treasury Happy With F&F Revenue

In an unusual release, Treasury publicly lauded Fannie and Freddie for their quarterly dividend payments, which allowed the US government to run a $53 Billion December 2013 surplus, compared to a 1.9 Billion deficit in December 2012, yet another sign of a strengthening economy (but you wouldn’t hear that on Fox Network News).

See story linked below.

As this blog often has discussed, Fannie and Freddie shortly will give back more in dividends than the $187 Billion Treasury initially invested in the two.

Unless turned over by Treasury regulation or statute—or possibly even a court decision in the major pending lawsuits--the “send all F&F revenue to the General Fund, over minimum capital” will persist for as long as F&F exist (which some in Congress would make a rather brief interlude).

The well-established F&F cash importance to the federal government, for me, calls into question the logic and viability of the Administration’s call to abolish the two. 

Some in the nation’s capital believe that the steam already is running out of the Bob Corker (R-Tenn.)-Mark Warner (D-Va.) legislative campaign, which also would do away with F&F.


Of course, reportedly a Senators Tim Johnson (D-SD)-Mike Crapo (R-Idaho) version of the bill is waiting in the wings, kind of making it C-W 2.0.


In a related note, last week, Sen. Corker suggested that there is some virtue in the claims of Fannie deferred and common shareholders, but he walked back that statement the following day.

Interestingly, Inside Mortgage Finance, two days after Corker pulled back his statement, published the following (Repeated here with the permission of IMF publisher, Guy Cecala).

By Charles Wisniowski

In 2014, lawmakers and the Obama administration will no longer be able to avoid confronting claims by GSE shareholders seeking recovery, according to one industry expert.

At the recent Financial Services Roundtable Housing Policy Council forum on GSE reform, financial industry consultant Bert Ely quizzed Sens. Bob Corker, R-TN, and Mark Warner, D-VA, about GSE securities. Specifically, Ely sought their positions on the merits of Fannie Mae and Freddie Mac preferred and common shareholders’ claims that there should be a mechanism for recoveries on those securities.

Corker replied that he and other lawmakers are drafting an enhanced version of the GSE reform bill he and Warner filed last year and recognize that “somehow or another, that has to be dealt with.”

“What I think their answer did was bring home to folks the extent to which there is a linkage between these residual stock interests and some kind of eventual restructuring of government guaranties in housing finance,” Ely told Inside The GSEs after the event.

GSE common shareholders became entangled in a financial limbo of sorts when Fannie and Freddie were placed into government conservatorship in September 2008. For more details on the legal outlook, see the new edition of Inside The GSEs.

Could Corker and Warner be trying to address shareholder matters in the draft bill being readied for the Banking Committee’s Chairman and Ranking Republican? 

Once again, it’s worth a clarification. 

As I write this, three junior House Banking Committee Democrats, announced plans to introduce a bill to sell Fannie and Freddie and keep the entities functioning in the mortgage market, sans any federal backup. 

Good thinking guys and good luck.

My Poker Game


There was a slightly heated, funny--and far from dispositive-- discussion at my poker game last week about NJ Governor Chris Christie. 

The verbose poker playing R’s claimed that would-be 2016 GOP presidential candidate Christie “will be fine politically” and the public will forget the bridge mess in a few weeks. The D’s—younger and more handsome to a man--said people will not forget or forgive and that Christie comes off as a hollow fool for being manipulated by his staff or a run of the mill liar.

I believe that Christie’s “political momentum” has been side tracked and he made himself vulnerable and subject to additional scrutiny and inquiry, which is not something the GOP needs as it tries to settle on a candidate to do battle with Hillary Clinton or whomever the Democrats nominate in 2016. 

No matter what one thinks, the following Bruce Springsteen/Jimmy Fallon video was one of the more creative responses to Christie’s troubles. 


Warner Gets Whacked and a Challenger

Senator Mark Warner (D-Va.) earned a whole lot of grief in a Huffpost article by Michael Lux, charging the Senator with dumping on the middle class and “benefiting Wall Street banks,” for his part in the Corker-Warner bill to abolish Fannie Mae and Freddie Mac. (Linked below.)

About the same time, Warner picked up a new Republican opponent, Ed Gillespie, longtime GOP lobbyist and insider, who must win the GOP primary before he can get at Warner. 

One irony in Gillespie is that years ago, he once represented the forces that went to battle with Fannie and Freddie, but Gillespie—if he survives his primary run—or any other primary or general election Warner opponent, wouldn’t have to do very much to get to Warner’s “left” in a competitive spat involving Warner’s Fannie/Freddie exploits. 

That challenger only would have to support something short of killing off the two mortgage entities and if Warner persists, he could find himself facing a determined, angry, vengeful bunch of Freddie Mac employees, who reside and vote in Virginia and who have the time and resources—and now motivation--to invest themselves in a  political campaign. 

Not to mention the few thousand additional Fannie employees who live in the “Old Dominion” and would be stirred by the same set of facts.
Unless he’s ready to retire, a serious political challenge might cause “Mark “30-1” Warner to deal more fairly with possibly 10,000 F&F workers (and their families) whose careers he would destroy and who Warner would cast in the street. 

Most US Senators like to brag about how many constituents they helped get jobs, not how many constituent jobs their legislation destroyed. Senator Warner won’t want to talk about how many Virginians his Corker-Warner bill could “unemploy,” how much in local goods and services those families stopped buying, and how much in state income taxes they no longer can send to Richmond. 

A smart opponent easily could develop those numbers. (I doubt if the impact in Tennessee would be that dramatic.) 

There still is time to wise up Senator “30-1” and consider the consequences of your legislation, which does a swell job for the nation’s behemoth banks, but--unless those banks move in and hire thousands of ex-Freddie and Fannie Virginia workers--your constituents will get the short end of this deal.


What Others are Saying 

Richard Leong in Reuters discusses possible front running of Fannie and Freddie swaps by Wall Street traders.


Maloni, 1-17-2014



Bill Maloni said...

The three House Banking Democrats, who say they will drop in the "sell and maintain" Fannie/Freddie bill are Reps. John K. Delaney (MD), John Carney (Del), and Jim Himes (CT).

Anonymous said...

Bill, Thanks for calling attention to the fact that Fannie Mae is in Senator 30:1 District. BTW that is an excellent name for him.

Bill it is disgusting that Senator 30:1 is throwing his constituents under the bus all in the name of a cash grab. Take a look at his and Mr. Tennessee's major campaign contributors and then connect the dots.

I don't like the new ideas of a privatization plan. Someone needs to expose the real truth of the matter outlined in Tim Howard's book. Thanks again for your blog.

Qualified Observer said...

Keep hitting!

Delaney/Carney/Himes press release:

Continued thanks for your continued efforts!

Bill Maloni said...

Note: It's Freddie which is HQ'd in McLean, Virginia. But Fannie, with corporate offices just a few miles away in DC, has plenty of employees who live and vote in Virginia and who would be
moved to oppose Warner, if he keeps up his attacks.

Rough estimate, probably a bit low, between the two work forces, they have 7,000 to 10,000 Virginia resident employees.

On the new bill, three young Dems are not going to move Hensarling and his gaggle, but it provides grist for other alternatives and in this case, which keep F&F functioning in some market capacity.

There is value here. Concerned that a post-legislation F&F still could dominate, the bill's sponsors would limit F&F to a future 30% market share.

Again, goes in a different direction (think "Millstein") and will garner some attention.

Bill Maloni said...

Reading another website this morning, I think someone misinterpreted my "good luck" wish to the three House D's and their new mortgage reform bill.

My wish was legitimate not sarcastic.

I welcome any new idea or plans in this arena and noted their planned bill would keep F&F alive, in some capacity.

The needed "luck" comes with trying to convince Chairman Hensarling and the committee's majority R's that the sponsors idea for a major federal role in mortgage finance is desirable.

Anonymous said...

Bill, thanks for that clarification of the Senate districting. Please research the top campaign contributors to Senator 30:1. and Mr. Tennessee and you will completely understand their intentions.

Bill Maloni said...

I have no doubt about their motives..and tactics.

Matt Hill said...


It looks like the Washington Post may be listening, at least a little bit. Finally have a pretty favorable story, with several references to Tim's book:

Bill Maloni said...

Yes, that was a positive review of Tim's book, but....(I'll touch on the "but clause" in my next blog).

Anonymous said...

Hey Bill, I just now saw your interview for the first time on Fox News back in 2010. The interviewer was trying hard to beat the crap out of you but you held your cool and you responded like a perfect gentleman. What's most intriguing is that the answers are now in fact proven true over time since that interview. I was wondering if there was any interest in another interview since?

One more question, have you ever looked into the Financial Services Roundtable /HPC group members? There is a lot of shadiness there.

Bill Maloni said...

Thanks Anon.

I generally make myself available to anybody interested in these issues, because I was around for most of the action and/or know the principals and the issues.

I try and educate reporters and congressional staff (either party)--who may feel I bug them--and do a variety of conference calls or make speeches when invited.

But, if nobody asks, I can't emote except in my blog.

Short answer is "Yes" on the FSR and meeting with their new exec former Gov. Tim Pawlenty is in my plans. I want to see if some of Pawlenty's comments about seeking new policy options is legitimate. (Last I heard, the association was seeking a new chief lobbyist, so if you know anybody job hunting......)

A hundred years ago--at the old Federal Home Loan Bank Board and before I went to Volcker's Fed--I worked with/for John Dalton, who is the FSR's head of housing matters and who hosted the conference recently which had Senators Corker and Warner speak.